A couple of good comments in that thread: "My main point is to ignore PE when considering buying a SaaS stock because it means nothing. In their last fiscal year, the 20 public SaaS vendors had $115 million in operating losses but generated almost $300 million in positive FCF. Note that I am NOT saying to buy stock in a SaaS company because of their FCF - rather, just replace the PE stat with the more applicable FCF stat."
"That's why cash flow (or more importantly Free Cash Flow) is what matters. Here CRM is doing well. In their last 4 quarters, they generated about $175 million in FCF vs. $36 mil in net income, meaing their P/FCF is about 18. The high SaaS vendor valuations (especially prior to the current market debacle) were driven by 2 facts - FCF and the high level of revenue predictability (recurring revenue is much more predictable than perpetual license revenue)."
Right or wrong, from what I can make out that is the long mentality in a nutshell and how the valuation is justified. However, cash flow is down YOY last Q and the Q before that was way down... I'm thinking that trend continues. Maybe it's just me, but this fact seems to have been lost in the earnings surprise?
Once again, it's a stock with a good (cost saving) story for a recession.
alot of big bears are getting bullish and i've noticed a concerted effort by the media/printing press in recent days to spin everything in a more positive manner; for full disclosure, i'm completely long expect a couple small hedges, glta